House prices: Growth slows with higher mortgage rates especially impacting more expensive areas | Business News
The average property in the UK is now £17,500 more expensive than a year ago, although house price growth has slowed and property in London is almost 25% cheaper than five years ago, according to data from property website Zoopla.
House prices rose 7.5% last year, although the increase has slowed to 0.3% over the past three months, Zoopla said.
This slowdown is expected to continue into 2023 when prices start falling mid-year.
House prices have risen 22% over the past five years, outpacing average earnings growth, according to Zoopla figures.
However, the cost of a property is expected to decrease when demand weakens due to a combination of higher mortgage rates, cost of living Pressure and low consumer confidence.
The impact of higher mortgage rates is being felt least in more affordable markets and most notably in the most expensive parts of the UK, Zoopla noted.
Price growth has been slower at the top end of the market, but where prices are more expensive, higher interest rates have a greater impact on borrowers.
Mortgage rate hikes began in the wake of September mini budget as expectations mounted that the Bank of England would raise interest rates further than expected to bring down inflation, which many feared would spiral into unfunded tax cuts and energy support spending.
After the mini-budget, the number of mortgages approved by lenders dropped to theirs lowest monthly level in more than two years in October, according to the Bank of England.
Many providers drawn mortgage products from the market amid market uncertainty.
There is already evidence of a market slowdown as Zoopla reports that sellers have accepted offers 4% below asking price in the last month to secure a sale.
trends seen in the COVID-19 The pandemic is beginning to unravel as demand for apartments and urban areas returns and rural and coastal homes are less popular.
Apartment hunters who were once looking for housing and working from home may be put off by increased prices in such areas over the past two years, Zoopla said.
So while London Real estate prices have fallen by 24%, demand for urban areas close to jobs and services is increasing.
Areas such as Bradford, Swindon, Coventry, Crewe, Milton Keynes and Southend have benefited from this urban buyer interest.
At the same time, home demand and sales in coastal and rural areas have declined more than elsewhere.
Areas where this trend is evident include parts of southern England such as East Kent, Torquay and Portsmouth; the wider Lake District area; and Mid Wales.